Stock Valuation 1. What should the price of any stock (=P.) be equal to? 2. MNO preferred stock is expected to pay a dividend of $6 per share, every year, forever. It just paid its annual dividend, so the next $6 dividend payment is exactly one year from today, and then every year after that, forever. The required return for MNO is 8%. a. Draw a diagram of the future cashflows to you for MNO, if you bought it today. b. Calculate the price you should pay for MNO today (P.) 3. You own shares of DEF. DEF just paid a dividend of $2.50. DEF plans to grow their dividend at a rate of 6% per year, forever. Assume the required return for DEF is 8% a. Draw a diagram of the future cashflows to you for DEF. b. Calculate the price someone would pay you for GHI today (P.) 4. You own shares of GHI GHI is expected to pay a dividend of $2.00 next year, and then to increase their dividend at a rate of 4% per year, forever. Assume the required return for GHI is 5% a. Draw a diagram of the future cashflows to you for GHI. b. Calculate the price someone would pay you for GHI today (P.) 5. You are considering buying some shares of stock in ABC. Company ABC plans to pay a dividend of $3.00 next year (in other words, at the end of this year), and $3.50 in two years. You believe you can sell the stock in two years at a price of $65.00. Assume the required return for ABC is 11% a. Draw a diagram of the future cashflows to you if you bought ABC today. b. Calculate the price you should pay for ABC today (P.) X